Financing the Economy: Presidential Authorisation For State Bonds

At most FCFA 280 billion to be raised from the money market but only when need arises.

Going by Cameroon’s Finance Bill for 2014, FCFA 280 billion could be raised from the stock market through the issuance of different bonds. A Presidential decree of March 31, 2014 authorises the Minister of Finance to go to the money market to raise the maximum FCFA 280 billion for the financing of development projects contained in the 2014 finance law of the country. The amount represents an increase from the FCFA 250 billion in 2013.

In an inquiry at the Ministry of Finance yesterday April 2, Cameroon Tribune garnered that the Presidential decree is an authorization and facilitation rather than an obligation. According to Léonard Kobou Djongue, Director of Treasury in the Directorate General of Treasury, Financial and Monetary Cooperation of the Ministry of Finance, the decree gives finance officials the leeway to harvest from the money market. “This will be when need arises as we do not borrow for the sake of doing so but to finance development projects,” he said.

Quizzed on the calendar of launching the bonds and which of them the Ministry of Finance intends embracing, Mr Kobou Djongue said all depends on the income and expenditure of the State especially with respect to what money is needed for.

He noted that if revenue from other sources like customs, taxation, oil et al is able to finance projects that are presented, then there will be no need going to the stock market. “Our role is to limit as much as possible the State indebtedness. We must only borrow when there is need,” he said.

As part of the operation, the Director of Treasury disclosed that the State already raised FCFA 25 billion in the first quarter of 2014 and FCFA 35 billion scheduled for the second quarter. Such short-term operations (within a year), he noted; do not need any presidential authorisation.

But should need arise for long-term operations like mandatory borrowing (like was the case in 2010 when FCFA 200 billion was raised and December 2013 when FCFA 80 billion was harvested from an operation initially planned for FCFA 50 billion), it would need time (at least three months) to lay the groundwork. This is because long-term operations, he said, once engaged cannot be halted. But the country is not yet there.